Oct29
AutoNation boost spending after posting its biggest profit
AutoNation Inc., the largest U.S. dealership group, posted its biggest profit of the year and said it would boost spending by 65 percent next year to update and buy stores.
The net income of $65 million compares with a $1.4 billion net loss in the previous third quarter.
“We are optimistic for the long-term prospects of the auto industry based on the successful restructuring of the domestic auto industry, the move to a demand-pull system and the rationalization of the dealer network,” CEO Mike Jackson said today in a statement. “We expect to be well-positioned to capitalize on these trends.”
AutoNation said its board of directors had approved $150 million in capital expenditures in 2010, a 65 percent increase, along with $250 million for repurchasing company stock.
“Investing in our facilities, investing in our stores through process and technology, repurchasing shares and making strategic acquisitions reflects the board’s and senior management’s continued confidence in AutoNation’s financial strength,” Jackson said.
To start, AutoNation said earlier this week it has signed agreements to buy a Honda store and an Acura store in Spokane, Wash. AutoNation stores already sell Toyota, Chevrolet, Subaru, Volkswagen, Audi, Mazda, Scion and Mitsubishi vehicles in Spokane.
The company also repurchased 3.7 million shares of its stock last quarter at an average of $17.81. The shares fell 3.7 percent Wednesday to $18.09.
Revenues down
Third-quarter revenues fell to $2.9 billion from $3.4 billion in the same period in 2008. Revenue declined in every category, including new and used vehicles, parts and service, and finance and insurance.
AutoNation said U.S. new-vehicle sales remain at depression levels. Jackson forecast a challenging fourth quarter and a gradual recovery beginning in 2010.
The company estimated the government’s cash-for-clunkers program, which sent August U.S. sales to their first year-over-year gain since October 2007, added about seven cents per share to its third-quarter earnings. AutoNation has about 178 million shares outstanding.
AutoNation is the top U.S. dealership group, with sales of 255,843 new units in 2008. It has posted profits for four straight quarters. Its $1.4 billion loss in the third quarter of 2008 reflected a $1.46 billion after-tax charge for the diminished value of its dealerships amid the U.S. recession and auto sales that were sliding to their lowest levels since the early 1980s.
SOURCE: [ Automotive News ]
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